Di Lullo v JG King Pty Ltd (No 3)

File Number(s): 2022/00133113

Publication restriction: Nil

JUDGMENT

1. This judgment addresses the claim for damages by the plaintiffs, Mr Adrian Di Lullo and Ms Letticia Di Lullo (“the Di Lullos”) with respect to defects in the house built for them by JG King Pty Ltd (“the Builder”). The judgment with respect to liability (see Di Lullo v JG King Pty Ltd [2025] NSWDC 213 (“the judgment on liability”)) was delivered on 13 June 2025.

2. In the judgment on liability it was determined that the Builder, when building the house for the Di Lullos in rural south-western New South Wales in 2017, breached s 18B of the Home Building Act 1989 (NSW) and breached the duty of care owed by it to the Di Lullos pursuant to s 37 of the Design and Building Practitioners Act 2020 (NSW).

3. Prior to entering into the building contract, the Builder recommended to the Di Lullos that the house be built on a waffle slab, which is constructed largely of concrete. The Di Lullos accepted the Builder’s recommendation. The Builder obtained a report from Macgregor Geotechnical Pty Ltd (“Macgregor”) (“the Macgregor Report”) which classified the vacant site as an H2 site, with reference to the requirements of AS 2870-2011, which relates to the classification of a site for the purposes of the design and construction of a footing system for a single dwelling. The Builder caused a waffle slab to be designed for the site by Enrik Engineering Pty Ltd (“Enrik”) on the basis that it was an H2 site. The waffle slab ultimately constructed at ground level on the site, by the Builder, subsequently experienced water ingress to its edges, causing “edge heave” which describes the lifting of the edges of the waffle slab, changing the slab from a flat structure to an irregular dish-shaped structure. The water ingress was possible because poorly compacted sandy fill had been used under the front verandah and rear alfresco area paving by the Builder, and in other areas paved by a contractor, creating a pathway for water to the edge beam of the waffle slab. The house built on top of the slab sustained extensive damage as a result of the changing shape of the slab. Some of the damage is described in the judgment on liability at [28] – [42]. The Scott Schedule provided at Tab 35 of the Court Book which was provided for the hearing on liability sets out the damage to the house in some detail. In her affidavit of 26 September 2025, Ms Di Lullo provided photographs taken by her on 25 September 2025 showing further damage which has appeared since her previous affidavit of 10 May 2024 and said:

37 The photographs I have taken show the following:

(a) a separation of the front door from the adjoining internal wall;

(b) separation of ceiling elements from the garage wall;

(c) lifting walls in the laundry;

(d) a failure of the silicon sealing between the laundry pantry wall and the floor;

(e) a lifting of the walls in the bathroom, leading to a failure of the waterproofing seal;

(f) a lifting of the internal walls in the master bedroom, including the doorway;

(g) significantly increased cracking in the master bedroom wall; and

(h) significant lifting of the ceiling from the internal wall of the pantry.

4. The hearing regarding the Di Lullos’ loss and damages took place from 8 – 10 April 2026 (“the loss and damages hearing”).

5. In the plaintiffs’ case on damages, evidence was given by Ms Di Lullo, Dr Peter Redman, a geotechnical engineer, Mr Philip Xeros, a structural engineer and Mr Howard Burton, a quantity surveyor.

6. In the defendant’s case on damages, evidence was given by Mr Garry Mostyn, a geotechnical engineer, Mr Lonnie Pack, a structural engineer and Mr Jeff Beck, a building consultant who gave evidence regarding the cost of rectification.

7. At the hearing, Mr Redman and Mr Mostyn gave evidence concurrently, focussing on geotechnical issues. Mr Xeros and Mr Pack also gave evidence concurrently, focussing on structural issues. For a brief period, Dr Redman, Mr Mostyn, Mr Xeros and Mr Pack all gave evidence concurrently. Mr Burton and Mr Beck also gave evidence concurrently regarding remediation costs.

8. Reference was also made to the evidence adduced in the hearing on liability.

Losses claimed

9. In the statement of claim, the Di Lullos pleaded that they have suffered the loss and damage set out in the Scott Schedule prepared by Mr Burton dated 17 November 2021 (which was updated by the Schedule of Damages which appears at Tab 14 of the Court Book). It was pleaded that the cost of completing the remedial work set out in the Scott Schedule “is likely to exceed the cost of demolishing and rebuilding the dwelling, such that the most cost effective remedial scope is the demolition and reconstruction of the dwelling”. At trial the Di Lullos submitted that the appropriate order for damages should relate to the demolition and reconstruction of the dwelling, together with reasonable alternative accommodation and relocation costs during the period of and the demolition and rebuilding of the house. At trial, the amount of the claim was amended to $1.25 million.

10. At the loss and damages hearing, the plaintiff provided a schedule of damages based upon two alternative methods; the demolition of the existing house and the building of a new house on a new foundation or the rectification of the damage to the existing house with measures taken to address the movement of the existing waffle slab.

11. The schedule of damages sets out the following alleged losses, based upon Mr Burton’s evidence:

| Item | Demolition/reconstruction (Incl GST) | Rectification (Incl GST) | | Defects | $1,015,539.80 | $1,009,401.80 | | Consequential losses Relocation out | $12,870.00 | $12,870.00 | | Relocation in | $7,150.00 | $7,150.00 | | Alternative accommodation Off site Rental property Allowance for additional travel over the 12 month period arising from distance to work/school OR | $33,110.00 $34,320.00 | $33,110.00 $34,320.00 | | On site Hire of temporary transportable dwellings on property | $63,910.00 | $63,910.00 | | Power supply | $27,940.00 | $27,940.00 | | Water/sewer supply | $12,100.00 | $12,100.00 | | Council fees | $5,500.00 | $5,500.00 | | Subtotal for temporary transportable | $109,450.00 | $109,450.00 | | TOTALS (April 2026 pricing) | $1,102,989.80 (with rental property) $1,132,139.80 (with temporary transportable) | $1,096,851.80 (with rental property) $1,126,001.80 (with temporary transportable) | | TOTALS (April 2026 pricing) including escalation current Middle East conflict | $1,184,939.80 (with rental property) $1,214,089.80 (with temporary transportable) | $1,178,801.80 (with rental property) $1,207,951.80 (with temporary transportable) | | TOTALS if 2027 uplift added (3.4% to line 1) | $1,137,518.15 (with rental property) $1,166,668.15 (with temporary transportable) | $1,131,171.46 (with rental property) $1,160,321.46 (with temporary transportable) | | TOTALS if 2027 uplift added and escalation for current Middle East conflict | $1,219,468.15 (with rental property) $1,248,618.15 (with temporary transportable) | $1,213,121.46 (with rental property) $1,242,271.46 (with temporary transportable) |

12. The defendant submitted that the damage to the existing house could be rectified. The defendant submitted that damages within the following range (depending upon which expert evidence was preferred in relation to the defects) would be adequate in all of the circumstances:

| Works | Beck | Burton | | Mostyn rectification | $67,375.00 | $350,900.00 | | Relevelling | $42,952.00 | | | Internal repairs | $34,100.00 | $157,577.00 | | Internal repairs of wet areas | $32,543.00 | | | Additional rectification word proposed by Dr Redman and agreed by Mr Mostyn | $20,000 (estimate) | $20,000 (estimate) | | Total | $196,970.00 | $528,477.00 |

Principles for the assessment of damages

13. In the judgment on liability, the Builder was found liable for breaches of warranties implied into the building contract by s 18B of the Home Building Act*.* Damages for loss and damage flowing from those breaches are assessed as damages for breach of contract.

14. The Builder was also found liable for breaches of s 37 of the Design and Building Practitioners Act, which provides:

37 Extension of duty of care

(1) A person who carries out construction work has a duty to exercise reasonable care to avoid economic loss caused by defects—

(a) in or related to a building for which the work is done, and

(b) arising from the construction work.

(2) The duty of care is owed to each owner of the land in relation to which the construction work is carried out and to each subsequent owner of the land.

(3) A person to whom the duty of care is owed is entitled to damages for the breach of the duty as if the duty were a duty established by the common law.

(4) The duty of care is owed to an owner whether or not the construction work was carried out—

(a) under a contract or other arrangement entered into with the owner or another person, or

(b) otherwise than under a contract or arrangement.

15. The Builder is liable under s 37 of the Design and Building Practitioners Act to the Di Lullos for economic loss caused by defects arising from the breaches of the duty to exercise reasonable care to avoid economic loss.

16. Economic losses sustained as a result of breaches of duty in undertaking building work are assessed on the same basis as losses arising from breaches of contract in that context (see Evans and Another v Balog and Another [1976] 1 NSWLR 36 at p 41).

17. In 85 Princess Pty Ltd v Fleming [2025] NSWCA 261 (‘85 Princess’), Ball JA, with whom Payne JA and Stern JA agreed, said, at [47]:

47. In relation to damages, the primary judge observed uncontroversially that the starting point was the statement of principle in Robinson v Harman (1848) 1 Exch 850 at 855; 154 ER 363 that an award of damages for breach of contract should so far as money can do it place the injured party in the position it would have been in if the contract had been performed and the statement of principle in Bellgrove at 618-9 that, in the case of a contractual stipulation that a building will meet certain specifications, that amount is the amount necessary to bring about conformity with those specifications provided that is a reasonable course to adopt. His Honour also referred to the principle stated by this Court in Owners SP 92450 v JKN Para 1 Pty Limited [2023] NSWCA 114 at [71] (Gleeson JA; with whom White and Brereton JJA agreed) that:

“The burden of proof for establishing loss lies on the claimant … By contrast, the party in breach of contract has the onus of displacing the prima facie rule for assessing damages as the cost of reinstatement.”

18. The defendant relied on what was said at [64] in 85 Princess, which I quote below in the context set out by Ball JA at [63] – [79]:

63. The two cases [ie Ruxley Electronics & Construction Ltd v Forsyth [1996] AC 344 and Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272] serve to demonstrate the point made by the High Court in Bellgrove that what is reasonable is very much a question of fact that depends on the particular circumstances of the case. They also appear to support the view that relevant to the question of reasonableness is the subjective intention of those in whose favour the relevant contractual requirement is included.

64. In Stone – a case relied on heavily by the primary judge – Kourakis CJ at [55] helpfully set out a number of matters relevant to the question of reasonableness. They are:

“(1) the degree of departure from the contractual stipulation;

(2) the adverse effect of the departure on the functional utility, amenity and aesthetic appearance of the building;

(3) the reasons, objectively ascertained and commonly known, for which the innocent party made the stipulation which was breached;

(4) the practical feasibility of rectifying the work, including the effects on third parties of attempting to do so;

(5) whether or not the innocent party intends to carry out the rectification work;

(6) the absolute cost of the rectification work and the disproportion between that cost and

• the value of the building and contract price;

• the diminution in commercial value of the building;

• the effect of the departure on the functional utility, amenity and aesthetic appearance of the building;

(7) the nature of the wrongdoer’s fault for the defect; and

(8) the public interest in reducing economic waste.”

65. As the primary judge pointed out (at J[84]), there is a question about (8) in view of the comments made by the High Court in Bellgrove, which cast doubt on the proposition. Moreover, although this is a useful checklist, it should not be applied mechanistically and the ultimate question remains whether in all the circumstances of the case it would be reasonable to undertake the work necessary to achieve compliance with the contractual specification.

66. As already mentioned, it is generally accepted that although the burden of proof for establishing loss lies on the claimant, the party in breach bears at least an evidential onus of displacing the prima facie rule that damages for breach of a contractual stipulation in a building contract are to be assessed by reference to the costs of reinstatement: see JKN at [71] and the cases cited there. It follows that the party in breach must at least introduce evidence which, if accepted and left unanswered, would satisfy the court that reinstatement is unreasonable.

67. The two methods of assessing damages identified in Bellgrove are not the only methods for assessing damages for breach of a contractual specification in a building contract. As Kirk JA and Griffith AJA pointed out in Roberts v Goodwin Street Developments Pty Ltd [2023] NSWCA 5 at [94], quoting with approval a passage from the dissenting judgment (in the result) of Santow JA in Port Stephens Shire Council v Tellamist Pty Ltd [2004] NSWCA 353; (2004) 135 LGERA 98 at [187], “rules and principles as the common law has developed to assess the damages of an injured party are not inflexible, and must always be applied with the overriding goal of compensation”.

68. In building cases, one way in which defendants often seek to establish that the costs of reinstatement are unreasonable is by leading evidence that some alternative and cheaper method of rectification would produce the same practical outcome, in which case damages are assessed by reference to the costs of that rectification method. In those cases, it is necessary for the defendant to lead evidence of the method, its effectiveness and its cost. Unless the court can be satisfied that the method of rectification is as effective as reinstatement, damages will not be awarded on that basis. Building Insurers’ Guarantee Corporation v The Owners – Strata Plan No 57504 [2010] NSWCA 23 is an example. In that case, the contract required the builder to construct concrete or brick hobs between residential units and their balconies to prevent storm water from entering the units. The builder had installed inferior wooden hobs. Following the builder’s liquidation, the owner sued Building Insurers’ Guarantee Corporation (BIGC), the builder’s insurer, for the costs of replacing the hobs with hobs that met the contractual specification. BIGC argued that it would be unreasonable to demolish and to replace the hobs because the same result could be achieved by treating the wooden hobs with a sealant. The Court (Handley AJA, with whom Tobias and Campbell JJA agreed) upheld the primary judge’s rejection of that argument. The expert called by BIGC gave evidence that little was known about the sealant, and there was no certainty that it could prevent water penetration under the aluminium angles. In the light of that evidence, BIGC had failed to establish its evidential onus:

“There was a clear breach of contract, the specified hobs which would have acted as a secure waterproof barrier had not been installed, and those that had been were inferior. In these circumstances the Guarantee Corporation had at least an onus of adducing evidence of functional equivalence, that the hobs as installed were just as effective as those specified.” (at [79])

69. Cases such as Guarantee Corporation need to be distinguished from cases, such as Ruxley, where the party in breach simply seeks to establish that it would be unreasonable for the claimant to insist on reinstatement. In those, the claimant has a choice. It can rely solely on its claim that the costs of reinstatement are the appropriate measure of its damage. But in doing so it takes the risk that, if the party in breach discharges its onus of proving that reinstatement is unreasonable, it will recover only nominal damages, since it will have failed to prove that it suffered any loss. Alternatively, the claimant can lead evidence of its loss calculated on that alternative basis. It is not for the party in breach to prove the damages that the claimant would be entitled to recover on that alternative basis.

19. In Kalantzis v Brown [2026] NSWCA 17, Adamson JA, with whom Ward P and Mitchelmore JA agreed, said, at 148:

148 Further, where, as here and in Evans v Balog and Sved v Woollahra Municipal Council, the property in question is a residential home in which the plaintiffs live, concepts of reasonableness take on a different complexion. Indeed, in Evans v Balog, Hutley JA, at 41, described Evans’ appeal as “quite ridiculous”, which I take to be a reference to Evans’ submission that, as the highest and best use of the Balogs’ home was for development, they had lost nothing. This analysis harks back to the general principle that a party ought not be permitted to profit from its own breach: see generally, Hawkins v Clayton (1988) 164 CLR 539 at 590; [1988] HCA 15 (Deane J).

20. It is clear that, where it is reasonably necessary for an owner/occupier of a building to relocate to enable remediation work to be performed on that building, the costs of the relocation will be recoverable as consequential loss (see for example Scripture Union v Prime Industrial Pty Ltd [2005] NSWSC 736).

The defects in the house

The waffle slab

21. As set out in the decision on liability, Enrik’s waffle slab document included notes on drainage requirements for the waffle slab, including the following notes:

2. Surface drainage shall be constructed to avoid water ponding against or near the footing. The ground in the immediate vicinity of the perimeter footing … shall be graded to fall 50mm away from the footing over a distance of 1m and shaped to prevent ponding of water. Any perimeter paving shall also be suitably sloped away from the footings.

3. Where perimeter paving slabs are constructed they must have a 10mm layer of ableflex or similar between the paving slab and the footing/wall. An agricultural drain or similar must be installed at the outer edge of the perimeter of the paving slab as per detail and is to be diverted to the legal point of discharge.

22. The Builder did not comply with the notes and did not take any alternative measures to ensure that water did not travel to the edge beam. No agricultural drain was installed. No system was installed by the Builder to collect stormwater runoff around the perimeter of the slab (the system to collect water from the roof was sealed). The perimeter paving constructed by the Builder along the length of the front (southern side) of the house and for the “alfresco area” of 5.05m x 3.375m at the centre of the rear (northern side) of the house was laid on poorly compacted sandy fill which was placed next to the edge beam of the waffle slab and the footing. A contractor engaged by the Di Lullos paved around the balance of the rear (southern side) of the house and along the eastern side of the house. The contractor followed the Builder’s lead in the level at which he installed the paving and in the method and materials he used to pave around the house, although the contractor used an upright rammer to compact the base material, whereas the Builder had levelled the base material using a Dingo Digger bucket. The fill under the paving absorbed water. That fill was placed on the clay base of the natural ground, which has low permeability so that the water was carried horizontally to the edge beam of the waffle slab through the sandy fill, causing the waffle slab to become distorted into an irregular dish shape. This occurred partly because of the nature of the fill and partly because, particularly once the paving was added, the fall of the ground away from the building was inadequate by about 200mm. The sources of the water, from time to time, were rainfall, a leak in the verandah roof, a leaking air conditioner, the absence of downpipes in the front verandah, a pipe apparently punctured by the concreter (repaired on 20 May 2020) and the watering system used to water the lawn at the front of the house. Mr Di Lullo damaged a sealed pipe to the water tank at one point, but he repaired it promptly. Enrik, in an inspection on 12 March 2020 also found:

Elbows detached from downpipes causing water leaks to charged down pipes feeding the water tank. This is likely due to footing movement with no lagging to the downpipe through the concrete paving to mitigate damage from thermal and seasonal movement.

On 26 June 2020, Turdinator Plumbing located a waste pipe join which was not operating correctly. On 22 July 2020, Turdinator Plumbing conducted a flood test and found that the sewer failed to hold water. On further investigation by T&M Plumbing, a damaged section of sewerage line was found under the house slab, near the back verandah. This was addressed.

Cause of the distortion of the waffle slab

23. In the decision on liability, I accepted the evidence of Dr Redman and set out his principal conclusions on the topic of the cause of the distortion of the waffle slab:

63. Dr Redman said, in the Geotechnical Conclave Report (CB p 1715):

In my opinion the presence of the abnormal moisture conditions is caused by the nature of the edge detail of the paving and slab.

In summary, this is because:

1. The designed and as constructed waffle slab edge detail did not adequately protect the slab against wetting-up under the slab edge.

2. The probable presence of the sandy fill under the Alfresco slab, front verandah slab and external paved areas, has allowed water to be directed to the level of the base of the edge beam to the main slab, producing abnormal moisture conditions and excessive heave of the edge beam.

3. The survey of slab levels shows that edge heave has continued to occur, notwithstanding the absence of services leaks or normal irrigation practices.

I also refer to PR Report 1 section 4.5.2 and PR Report 2 section 2.3, where I set out my reasoning in arriving at this opinion in detail.

In my opinion the edge detail is the main factor and has influenced the slab movements during the period of irrigation and subsequently. I note that surface drainage may have had an effect locally at times, and an earlier services leak probably had a local influence prior to the leak being repaired. Neither of these secondary factors has had a significant effect on the scale or distribution of the slab movements indicated by the survey data and observations of damage.

64. In his first report, Dr Redman says (CB p 1133):

The waffle raft footing system involves the construction of the waffle raft on a level platform without the need to excavate for beams. It is a feature of the waffle raft system that the absence of an embedded edge beam makes the system more vulnerable to moisture changes near the edge. (fn See Commentary to AS2870-2011 clause C3.1.1, p125. Walsh and Cameron (1997) section 3.6, p66 also make this point in their discussion of the advantages and disadvantages of the waffle raft).

65. In his first report, Dr Redman describes Enrik’s design of the waffle slab, noting that, in a cross section drawing, Enrik shows a “fillet” of fill against the base of the edge of the slab, with the balance of the side of the edge clear of fill.

66. Dr Redman says (CB p 1134):

From a geotechnical perspective the main difference between what is shown on the Enrik Civil Structural drawings and the as constructed condition is the relationship of the edge of the waffle raft footing system to the surrounding ground. As noted in the Aitken Rowe Report test pit logs, and in the Xeros Report, the paving and ground levels around the perimeter of the Dwelling are approximately 100mm below the floor level of the slab. That is, the land has been built up around the slab to bury the main part of the waffle raft system edge beam.

Extent of the damage to the waffle slab

24. The design of the waffle slab required the edge beam to rest upon “the natural soil”. At the time of the judgment on liability, the edges of the waffle slab had lifted unevenly so that the slab, which should lie flat, had become an irregular dish shape. The lowest point of the distorted slab remains on or near the level at which it was placed.

25. In the decision on liability, I set out some of the evidence of Dr Redman on the extent of the damage to the waffle slab:

81. Using the available data, Dr Redman prepared a graph which shows the movement of points A to H (CB 1153), around the perimeter of the house over the period from 1 October 2016 to 1 October 2022 (see CB p 1153). Near the south-west corner of the house (at the front of the house), at point A, the slab heaved about 32mm between 1 October 2020 and 1 October 2021 and then returned, after 1 October 2022, to about 23mm from its position on 1 October 2016. On the south-east corner of the house, at point C, the total heave of the slab over the period plotted was 92mm, with the highest point at the end of the period plotted. Five points, D to H, were plotted for the northern face of the house. The lowest amount of heave over the period plotted was 38mm at point F, which was at the back door by the Alfresco area, and the highest amount of heave was at point D, on the north-eastern corner, which is plotted at 92mm. The graph showed a possible movement to settlement at A and possibly B, but not at any other of the points. The graph shows that the possible movement to settlement at A and B follow the plumbing repair on 20 May 2020.

…

86. Dr Redman noted that damage was observed by January 2018, including cracks and settlement issues. By April 2018, there were observations by the Builder of plaster cracking in the hallway along bed 2 and bed 3 walls and cornices cracking along the hallways in the kitchen. Dr Redman noted that these observations were made before irrigation of the lawn began.

26. Figure 10 from Dr Redman’s report of 22 February 2023 shows the locations around the outside of the house at which measurements were made and the graph plotting those measurements from 1 October 2016 to 22 October 2022.

27. The judgment on liability recorded the position as it was at the time of the hearing on liability:

89. Dr Redman said, in oral evidence (transcript Day 2 p 193):

... the empirical data, the survey, does not show a general recovery has taken place, at least at the time of the last survey. There are a couple of points which are showing a turnover, and they’re in certain, specific locations, but the other data is showing a fairly consistent upward trend of continuing heaving movement, at that time. So I’m unable – I think the building is still moving, based on that, and if so, in which direction – generally, it’s still heaving.

Current state of the waffle slab

28. Mr Mostyn was provided with two surveys which were undertaken subsequent to the surveys considered at the hearing on liability. One survey was dated January 2023 and the other was dated October 2025. They are not before the Court. Mr Mostyn said that the survey from January 2023 provided datum for location 4, which is near the middle of the house, and for location 5 which is on the western side of the house adjacent to the garage. The survey from October 2025 provided datum for location 4 only.

29. Mr Mostyn said, in his report:

73. I note the following in regard to the survey results over time:

…

(e) On average there has been essentially a “zero trend” of movement since November 2020. This is consistent with the measured slab shapes as shown by contours … which have been essentially the same since this date. There are some minor variations around this “zero trend” with potential explanations being:

i. Survey error (limits on accuracy of survey).

ii. Transient variations in rainfall based on the monthly rainfall at Jerilderie Treatment Works Station 074055 sourced from the Bureau of Meteorology (BoM) (as shown at Inset 26); the small “jump” in some of the readings between December 2022 and January 2023 appears to coincide with rainfall in October 2022 and November 2022 which recorded 156 mm/month and 167 mm/month respectively the highest levels recorded between 2017 and 2025,. However I note that this “jump” is small compared to the movements that occurred prior to the pipe being repaired which indicates:

…

(B) The soil including the fill is likely close to saturated and the reactive soils at “maximum heave” because extreme rainfall events caused relatively minor movement.

30. Mr Mostyn said that there has been “minimal movement” over the last five years. Mr Mostyn said that the maximum relative displacement as at the survey in October 2025 was 89mm and the contours of the survey show similar shapes.

31. Dr Redman agreed that the heave movements had stabilised and that the fill is “likely close to saturated”. Dr Redman’s opinion was that the stabilisation had occurred over the last three years, rather than the last five. Dr Redman agreed that the October 2025 survey indicated that the maximum relative displacement at that time was 89mm.

32. Mr Mostyn said, in his report, after saying that the movement of the slab had stabilised on account of maximum heave having been arrived at:

151. However it is possible in my opinion, if there is an extended dry period and given that the leaky pipe has been repaired and assuming there are no further leaks developing, that water could eventually exit the foundation and the heave might decrease. Followed by an increase in heave again to the current asymptote, when water is re-introduced.

152. Therefore in my opinion it is not appropriate to undertake remedial works to the existing house, or rebuild upon the existing slab, unless the fill and pavement around the house is first (or concurrently) remediated.

33. I accept Mr Mostyn’s opinion on this point. Mr Mostyn contemplates that, following remedial works, and in the absence of new leaks developing in any of the pipes under or around the house, the ground under the slab could dry out, which may result in a reduction in the extent of the edge heave; in other words, the level of the edges of the waffle slab may reduce to some extent. If, at some time subsequently, water is re-introduced, by, for example, a pipe leaking, and that water reaches the edge beam, then the edge of the waffle slab will rise again in a further instance of edge heave.

Remediation of the waffle slab

34. In his statement, at paragraph 153, Mr Mostyn said that the method of remediation of the waffle slab should comprise the following steps:

(a) Remove the existing pavement and fill beneath the pavement surrounding the house, and replace with fill of sufficiently low permeability in accordance with AS2870 and CSIRO BTF 18-2011 (Sections 2.2.1 and 2.2.2). Note, the existing fill might be able to be reused for this purpose, provided it is adequately compacted and/or treated to achieve the required permeability.

(b) Re-construct the overlying concrete pavement in accordance with AS2870 and CSIRO BTF 18-2011 (Sections 2.2.1 and 2.2.2), including with appropriate grades away from the house and no gaps adjacent to the house.

(c) Beneath the house, grout or resin injection or similar may be required to re-level the slab.

(d) Note my assessment assumes no future plumbing leaks or other sources of water corresponding to abnormal moisture conditions. …

35. In his report of 7 April 2026, Dr Redman agreed with the four steps proposed by Mr Mostyn and said a further step should be undertaken:

11.(b) The scope of work set out at [153] should, in my opinion, be expanded to provide for some control on infiltration to areas under the Alfresco area and the front verandah. These areas are also underlain by permeable fill. In my opinion, an appropriate measure to undertake, on the assumption that the existing slab to those areas remains in place, would be the installation of a cut-off trench, say 0.15m wide x 600mm deep, concrete filled with nominal reinforcement to provide crack control of the concrete. The cut-off would be installed along the external edge of the Alfresco slab and the front verandah slab, with an appropriate joint between the two.

36. In oral evidence, Mr Mostyn agreed that the further step proposed by Dr Redman should be undertaken.

37. Mr Mostyn said, in his report:

154. Once remediation of the pavement and underlying fill is completed, I expect this will stabilise the extent of future movement of the slab to within the expectations of AS2870, and therefore permit effective remedial works to the existing house or rebuilding upon the existing slab. I have not assessed which of these options (remedial works or rebuild) is more appropriate; I consider this to be outside my expertise.

155. I have not assessed whether the house slab has been damaged or otherwise comprised [sic] from a structural perspective.

38. Dr Redman said, in his report of 7 April 2026:

12. The redacted Mostyn Report notes at [155] that “whether the house slab has been damaged or otherwise compromised from a structural perspective” has not been assessed. I also have not assessed the slab, from a structural perspective, as it lies outside my area of expertise. I note that the damage to the building, assessed from a structural perspective, also lies outside my area of expertise.

39. Mr Mostyn addressed some of the requirements of AS2870 in paragraph 22, 23 and 25 of his report:

22. Clause 6.6(d) of AS 2870 states the following:

Excavations near the edge of the footing system shall be backfilled in such a way as to prevent access of water to the foundation as described in Clause 5.6.3(b).

NOTES:

1. For example, excavations should be backfilled above or adjacent to the footing with moist clay compacted by hand-rodding or tamping.

2. Porous material such as sand, gravel or building rubble should not be used.

23. Clause C5.6.3 pf the Commentary to AS2870 states the following:

Trenches for service piping may introduce water into the subsoil beneath a building. Backfills are usually highly permeable relative to the surrounding clay soils. Therefore, the surface of the backfill within the vicinity of the building should be “sealed” to reduce moisture ingress. Additionally, the base of the trench should be sloped away from the building to drain any water away.

…

25. Based on the above, it is my opinion that backfilling above and around footings should not be undertaken using permeable material, and should have a ‘sealed’ surface grading away from the building. It is my opinion this conforms with both good and standard practice on reactive soil sites.

40. Dr Redman agreed with the opinion expressed by Mr Mostyn in paragraph 25.

41. Mr Mostyn believed that the works to remediate the slab could be performed within about three months. Dr Redman’s view was that it would take three to six months.

42. Following the works to remediate the slab, time would need to elapse to enable the ground to come to equilibrium with the changed moisture conditions. Mr Mostyn predicted that it would take twelve months. Dr Redman agreed.

43. The geotechnical engineers agreed that the main recovery of the waffle slab would be at the corners of the slab which had heaved to the highest point. Mr Mostyn said that “the recovery might well be between 10 and 20 millimetres”. Dr Redman said:

… I think the recovery will be mainly seen only in those areas which have experienced the highest heave – that’s – like – the eastern end in particular – it will be 5-10millimeter sort of range, and other areas will not recover or see any change at all. So you will essentially have reduced the differential movement only by a small amount. By the differential movement, I mean the differential movement of the slab.

44. I accept Dr Redman’s evidence that the eastern edge may move within about 5 to 10 millimetres as a result of the remediation of the area around the waffle slab.

45. The geotechnical engineers agreed that the waffle slab is currently a dish shape and will also be a dish shape after the remediation works around the waffle slab. Dr Redman said:

Yes, still a dish, with a differential between the centre and the edges, which will still be of the order of 70 millimetres.

46. The geotechnical engineers agreed that the works to repair the defects in the house should not begin until twelve months after the completion of the works to remediate the slab.

47. The purpose of the grout or resin injections proposed by Mr Mostyn is to reduce the differential between the lowest and the highest point of the irregular dish shape of the waffle slab as it might be following the external works set out at [33] – [34] above. AS2870 requires the differential to be no more than 30mm for a house of articulated masonry veneer. The purpose of the requirement is to prevent damage to the on and above slab elements of the house from excessive movement of the slab. It is anticipated that the differential brought about by the works set out in [33] – [34] above, without the grout or resin injection, will result in a differential of about 70mm, which is well beyond a 30mm differential, and therefore risks continuing damage to the house. The reduction in the differential between the lowest and the highest point of the irregular dish shape of the waffle slab is proposed to be brought about by the injection of grout or resin through the floor of the house, and through the slab, at many points at and around the lowest part of the irregular dish shaped slab. The aim is to raise the lowest part of the slab off the ground, for the first time, to a new level. Mr Mostyn said that the resin or grout injections could be performed near the end of the twelve month period after the completion of the works to remediate the slab.

48. Dr Redman said, of the grout or resin injection process, in oral evidence:

… if what your objective is, is to reduce that amount of differential movement, the constraint’s going to be the elevation of your high parts. So if you’ve got a part which is 70 millimetres – for example – above the centre, and you’ve got to get down to 30 millimetres, you’re going to have to lift up the middle part of the house – that bowl shape in the middle – by 40 millimetres. So it’s not just injecting the slab to lift the slab, you’ve got to bring the whole of the house – including the H-beams and structure that’s sitting on top – up by 40 millimetres.

49. Dr Redman pointed out that the base of a waffle pod consists of grids or ribs, and that putting high pressure grout into the voids between the grids or ribs might have unforeseen consequences. Mr Mostyn agreed that grout injection under a waffle slab is different from grout injection under a stiffened raft, but he thought that the process in the context of a waffle slab is now “routine”. Mr Mostyn thought that up to 40 injections may be required. Dr Redman thought that it could be many more than that. The number and location of injections required would not be known until the process was underway.

50. Mr Mostyn said that it might be that the southeastern corner of the slab would come down by reason of the remedial works to the point that it was necessary to raise the lowest points of the slab only about 20 millimetres to achieve a 30 millimetre differential. Mr Mostyn said that most of the plumbing in the house is at about the level to which the slab would need to be raised. He did not think that the plumbing would be affected. He said, of the plumbing, “Points are higher than it, points are lower than it, and we’re only going to fiddle with the points lower than it”.

51. Mr Mostyn has not been to the property, but he has seen relevant plans and maps. Dr Redman has been to the property and has also seen relevant plans and maps. Dr Redman pointed out that the kitchen is within the central area of the house and has plumbing at the zero to ten contour which will be elevated by 10 to 20 millimetres if the grout or resin injection process is undertaken. Dr Redman indicated that the plumbing which will be elevated has to stay connected to other parts of the plumbing system which have not experienced the same degree of heave. This could clearly cause issues with the soundness of the plumbing. I accept Dr Redman’s evidence (see Transcript 9 April 2026 at pp 48-49).

52. As to the process of grout or resin injection, Mr Mostyn said, at first, that it might take place over two days. He said:

Mr Mostyn: You’ve got to strip out the tin … (not transcribable) … and things like this, because your drilling through everything to actually inject these grounds.

HH: Drilling through everything, what’s everything?

Mr Mostyn: Everything being tiles. You’ve removed the carpet. Drilling through tiles, then through the concrete, through the polystyrene pods, and through the moisture barrier.

53. Later, in oral evidence, Mr Mostyn agreed that it might be necessary to have a second sequence of grout or resin injections within days of the first sequence.

54. Mr Mostyn said that all of the finishes within the house in the area to be treated would need to be stripped out. The holes required to be made in the slab would be made by a corer or jackhammer. A pipe, which would be attached to a pumping system outside, would then be placed in the hole and grout or resin would be pumped under pressure into the ground under the slab.

55. The geotechnical engineers agreed that, at the end of the works set out in [33] – [34], the waffle slab would still be an irregular dish shape. At the end of the works, after the slab has settled, and for the entire future of the building, the slab will continue to move. In oral evidence, Dr Redman said that future movement of the slab edges may go beyond the 30 millimetre differential from time to time (see Transcript 9 April 2026 pp 54-56). Dr Redman said, at p 55 of the transcript:

We’ve said that the grout injection would have the objective of getting the differential movements of the slab to within the 30 millimetres but then there’s the subsequent, over the lifetime of the structure, of shrink/swell movement which is affecting the level of the ground around the slab over time and that is an overlay on your existing 30 millimetre differential movement. So the 30 millimetres differential is the starting point. It’s not what you contain the slab to in the future, necessarily.

56. I accept Dr Redman’s evidence.

57. The geotechnical engineers agreed about many things. Where they differ, I prefer Dr Redman’s evidence. Mr Mostyn elided over some of the risks and complexities of the remediation process and consistently adopted the most optimistic possible outcome as being likely.

58. The remediation process contemplated is subject to many risks, including the following:

59. The level to which the sides of the slab will subside, particularly the eastern side, which is the most elevated, within six months of the remediation work (except for the resin or grout injections) is likely to be within the range of 5 to 10 millimetres on Dr Redman’s view or 10 to 20 millimetres on Mr Mostyn’s view. If the eastern slab edge only subsides 5 millimetres, the 30 millimetre differential will not be met, AS2870 will not be complied with, and the house will be at risk of ongoing distortion.

60. Even if Mr Mostyn’s optimistic 10 to 20 millimetre subsidence of the eastern side is realised, and the grout or resin injections achieve the 30 millimetre raising of the middle of the slab, the slab will remain a bowl which is subject to further movement which may take the differential beyond the 30 millimetre differential required by AS2870.

61. The lowering of the edges of the slab by means of the remedial work (except for the resin or grout injections) is likely to cause new movement and damage to components of the house.

62. The process of the grout or resin injections will damage some of the floor tiles, the concrete slab, the polystyrene pods and the moisture barrier. The extent of the injections that will be required is unknown. The cost is unknown. The resultant shape of the slab will be a new irregular dish shape. The raising of the middle of the house may cause further damage to the house, including to the plumbing of the kitchen.

63. The impact of the distortion the waffle slab has experienced to date on the structural integrity of the slab is unknown. The impact on the structural integrity of the slab of the remedial work, which will move the eastern and possibly the western edge of the slab down, and then move the central area of the slab up, is unknown.

64. Insurance, guarantees and warranties may not be available to the Di Lullos for elements of the remedial work.

Remedial works internal to the house

59. The damage to the internal area of the house is referred to in [3] above. It is extensive. Presently, the only damage to the outer, brick walls of the house which has become apparent is the damage reported by Mr Beck in his report of 20 March 2026. At his inspection of the house on 17 October 2025, Mr Beck observed the following (Report p 39, CB p 956):

External damage to building

I observed patent damage to brickwork mortar beds and perpends. Cracking of the mortar did not exceed 5mm in any location around the building.

Damage to mortar beds and perpends and masonry is to be assessed to Appendix C of AS2870 – 2011 which defines Classification of damage due to foundations movements.

The width of cracks in mortar beds is defined as ‘Slight’ in accordance with AS2970 – 2011.

There is evidence of movement around windows as flexible sealant has split open. I did not identify any window frame that was damaged or displayed any distortion of the aluminium frames.

60. The parties agreed that the Court should consider only two possibilities for the property; the demolition of the house, including the slab and the building of a new house on the one hand, or the repair of the existing house following the slab remediation works referred to at [33] – [34] above, on the other hand. Mr Xeros discussed a third alternative, involving the retention and topping of the existing slab after remediation, which the Court was requested not to consider.

61. Mr Xeros’ preferred option is the demolition of the house and the building of a new house on the property. His view is that the repair of the damage to the house would not bring the house into compliance with the relevant Australian Standards. In his report, Mr Xeros referred to the Scope of Works provided at the hearing on liability. In his report of 26 September 2025, Mr Xeros said:

15. Due to the large deformation in the slab, and in addition to the obvious failures that have occurred, there are latent conditions present due to excessive strain. For example, in my report dated 11 May 2021, Section 2, page 5, paragraph (e) dot point 4 predicts the failure of the wet seals. The wet seals in the main bathroom have since failed, causing moisture damage and mould in the wall structure.

16. The potential failures due to latent conditions exist for all of the services, including plumbing, drainage and sewerage. There are failures in the roof system (described in paragraph 6.1.5 of my report dated 11 May 2021); however, these will be rectified under either scope of work proposed.

17. I remain of the opinion that the building should be demolished and reconstructed.

62. It was Mr Xeros’ opinion that no builder or engineer would provide any warranty as to the levels the slab will reach or as to the structural performance of the slab or the house after the grout or resin injections contemplated by the remediation plan described in [33] – [34] above. The obvious concern is that the owners of the house would then be left without recourse in the event that the house were to sustain further damage in the future, arising from the condition of the slab, or in the event that the latent damage Mr Xeros spoke of were to manifest in the future.

63. In his report of 26 September 2025, Mr Xeros set out his recommended scope of demolition works (CB p 646):

18. The demolition would require the removal of the building, all services and footings. The site would be excavated back to the original ground level and scraped for vegetation for an area of the building plan, plus approximately 5 m around the perimeter. In my opinion, if the existing slab were to be demolished, in order to prevent water reaching the underside of the new slab, and to have perimeter drainage in accordance with Australian Standards, an elevated, structural, controlled-fill pad of non-porous road base material should be installed to a depth of approximately 600 to 700 mm, giving the site sufficient elevation to drain in order to comply with Cl 5.2.1 of AS 2870 in terms of fall away from the house perimeter. Based on my experience with flat sites with reactive clay soils, this elevated pad is required to allow satisfactory drainage. I refer to my opinion set out in paragraphs 135 and 250 of my report dated 31 May 2024.

19. A new raft slab would be constructed on the controlled fill pad consisting of edge beams 700 mm deep, a format agreed of beams, 3-N 16 top and bottom in the beams, SL 92 mesh.

64. Once the slab is in place, the house would be built on top of it and the other works provided for in the contract entered into by the parties on 16 August 2016 would be completed.

65. Mr Pack, in his report, summarised his opinion concerning the remediation works for the interior of the house in his Executive Summary:

[14] In my opinion, the consequential issues are the defects that have occurred as a consequence of the edge heave and associated building movement (Consequential Issues). This includes items such as cracks, gaps and damaged seals. In my opinion, the typical cracks and gaps should be rectified by normal plastering and painting. In accordance with AS 2870:2011, Appendix C, cracks and gaps that are less than 5 mm wide should be filled and painted. Any cracks that are wider than 5 mm should be repaired and may require small parts of walls to be rebuilt.

[15] Where walls have lifted upwards from the slab, they should be bolted down using M 10 mechanical anchors. Where trusses have disconnected from the walls, new screws and cleats should be installed to ensure that they are adequately fastened. The loose screw in the roof truss should also be replaced.

[16] Based on the photographs, many of the cornices and skirting boards should be repaired. Any jammed or misaligned windows and doors should also be repaired.

[17] If bathroom seals are broken, then tiles (and any other necessary items) should be removed, and the bathrooms should be re-sealed. Any removed items should then be reconstructed.

66. Mr Pack addressed the remediation external to the house in his report at paragraph 112 (CB p 875):

[112] All perimeter pathways should be demolished and removed. The layers of fill which include sand should then be removed. The abnormal moisture conditions should then be removed such that levels return to a maximum differential slab level of 30mm (refer paragraph [68] & [69]). New fill should then be installed as recommended by a geotechnical engineer. Finally, the perimeter slabs should be reinstated with a minimum fall of 50mm across the first metre of length. The ground should then generally be graded away from the building, if there is inadequate grade around the building, then the grassy areas should be graded back to the slope that was surveyed prior to the Plaintiff’s installing the grass.

67. In his report of 16 February 2026, Mr Mostyn provided a scope of works:

152. …in my opinion it is not appropriate to undertake remedial works to the existing house, or rebuild upon the existing slab, unless the fill and pavement around the house is first (or concurrently) remediated.

153. This remediation in my opinion should include:

(a) Remove the existing pavement and fill beneath the pavement surrounding the house, and replace with fill of sufficiently low permeability in accordance with AS2870 and CSIRO BTF 18-2011 (Sections 2.2.1 and 2.2.2). Note, the existing fill might be able to be reused for this purpose, provided it is adequately compacted and/or treated to achieve the required permeability.

(b) Re-construct the overlying concrete pavement in accordance with AS2870 and CSIRO BTF 18-2011 (Sections 2.2.1 and 2.2.2), including with appropriate grades away from the house and no gaps adjacent to the house.

(c) Beneath the house, grout or resin injection or similar may be required to re-level the slab.

(d) Note my assessment assumes no future plumbing leaks or other sources of water corresponding to abnormal moisture conditions (paragraph 105). Such scenarios would be outside the scope of AS2870.

68. Mr Xeros, in the conclave of experts, expressed concerns about the proposal to use a grout or resin injecting process to raise the centre of the slab. He said that the result would be that the middle of the slab would be resting on a different material from the edges of the slab, creating the potential for the middle and the edges to respond differently as soil conditions change in the future with seasonal changes. He said that the slab may “rock” on the grout or resin. I understand this to be a concern that the grout or resin injecting process may not be performed properly. If the process is undertaken properly, the slab should not “rock” on the grout or resin.

The evidence of the quantity surveyors

69. Mr Beck, in his report of 20 March 2026, costed the remedial works suggested by Mr Xeros, Mr Pack and Mr Mostyn.

70. In costing the total demolition and rebuilding of the house and slab recommended by Mr Xeros, Mr Beck used Mr Burton’s itemisation of the tasks involved. In his report, Mr Beck arrived at a total costing of $917,052.00, which he subsequently adjusted to $1,136,392.00, including GST. The adjustment included fees, removal costs, storage, temporary accommodation, disconnection, removal and storage of salvageable items, the excavator/concreter, carpenter, joiner, hydraulic services and external pavement and landscaping.

71. Mr Beck also costed the building of a house by a “volume builder”. The cost provided in his report was $678,895.00, and in evidence he added a further $2,500.00 on account of long service leave, giving a total of $681,395. However, the volume builder estimate was based on a house built on screw piles, which is not the house the subject of the contract between the parties signed on 31 August 2016.

72. Mr Beck estimated the works recommended by Mr Mostyn to rectify the slab (set out in Mr Mostyn’s report at [153] (a), (b) and (d), above at [66]) at $67,375.00. He estimated the relevelling work in Mr Mostyn’s report at [153](c) at $42,952.00. A further $20,000 is added on account of the additional work suggested by Mr Redman and agreed by Mr Mostyn (see [34], above). The total estimate for Mr Mostyn’s works is therefore $130,327.00.

73. Mr Beck costed the making good of the exterior and the roof of the house, including the mortar of the brickwork, the roof, the downpipes, the verandah and the roof trusses, together with sealant and painting for the external window and the painting of the alfresco area, the verandah and damaged internal areas to the nearest breakable line at $34,100.00. Mr Beck costed Mr Pack’s remediation of the wet areas internal to the house at $32,543.00. The total cost of the works to remediate the slab and the house on top of the slab would therefore be $196,970.00.

74. Accommodation for the Di Lullo family whilst the works required them to be out of the house was not costed by Mr Beck.

75. In a report of 28 October 2025, Mr Burton estimated the cost of the demolition of the house, including the slab and all associated structures and services, and the building of a new slab and a new house (described as a “project house”) in accordance with the contract between the parties signed on 31 August 2016. Mr Burton’s estimate was $1,102,990.00. In addition, Mr Burton anticipates that the provision of alternative accommodation for the Di Lullo family for the duration of the demolition and construction of the house will be $116,600.

76. Mr Burton’s estimate of the costs of the work set out in [72] and [73] was $508,477.00.

77. Submissions were made in the defendant’s case that Mr Burton’s estimate for the demolition and rebuild was based on works being performed by “a custom builder” and not a “volume builder”. I reject that submission. Mr Burton’s estimate is based on a “project house” which implies that it is not a custom build.

78. Mr Burton, in his report of 7 April 2026, compared his quotes with Mr Beck’s quotes. In the same report, Mr Burton said that costs are increasing rapidly as a result of “the current global environment”, clearly referencing the war in Iran. Mr Burton said that, given the location of the house, the cost of remediation works will be impacted by rising transport costs. Mr Burton provided a “Costing Increase Summary”, broken down by trade or activity, and concludes that, as at April 2026, the cost of the remediation works had increased by $81,950.00. Mr Burton included items in his analysis of the cost increase which make it clear his estimate of the cost increase was made in relation to the demolition and rebuilding scope of works. In oral evidence, Mr Beck agreed that costs had increased but did not proffer an estimate of the extent of the increase. If Mr Burton’s cost increase is added to his estimate of the demolition and rebuilding scope of works, his estimate becomes $1,184,940.00. When Mr Burton’s estimate of the cost of alternative accommodation for the Di Lullo family is added to the building costs, the total becomes $1,301,540.00. The limit of the jurisdiction of the District Court in this matter is $1,250,000.00. I note that Mr Beck’s estimate of the cost of the demolition and rebuilding option, if added to the only estimate of the cost of alternative accommodation for the Di Lullo family, which is Mr Burton’s estimate, would also exceed the jurisdiction of the District Court.

79. Submissions were made in the defendant’s case that Mr Xeros’ scope of work, which includes the laying of a road base material bed for the slab and a raft slab rather than a waffle slab would be more expensive than the waffle slab contracted for. There is, however, no evidence as to the difference, if any, in the cost of the two slab types.

Consideration of the remediation works

80. The award for damages in these proceedings “should so far as money can do it place the injured party in the position it would have been in if the contract had been performed” (see 85 Princess at [47]). The subjective intention of the Di Lullos is relevant to the question of what is reasonable by way of the rectification method and damages. The practical feasibility of the rectification methods proposed are relevant, as are the other factors set out at [55](1) to (7) in Stone v Chapp**el (2017) 128 SASR 165. As Ball JA said, in 85 Princess, at [65], “the ultimate question remains whether in all the circumstances of the case it would be reasonable to undertake the work necessary to achieve compliance with the contractual specification” (see the authorities set out at [17] – [20], above).

81. The extent of the edge heave up until 1 October 2022 is depicted in Dr Redman’s Figure 10, which is reproduced at [25] above, was described in the decision on liability in the following way:

81. Using the available data, Dr Redman prepared a graph which shows the movement of points A to H (CB 1153), around the perimeter of the house over the period from 1 October 2016 to 1 October 2022 (see CB p 1153). Near the south-west corner of the house (at the front of the house), at point A, the slab heaved about 32mm between 1 October 2020 and 1 October 2021 and then returned, after 1 October 2022, to about 23mm from its position on 1 October 2016. On the south-east corner of the house, at point C, the total heave of the slab over the period plotted was 92mm, with the highest point at the end of the period plotted. Five points, D to H, were plotted for the northern face of the house. The lowest amount of heave over the period plotted was 38mm at point F, which was at the back door by the Alfresco area, and the highest amount of heave was at point D, on the north-eastern corner, which is plotted at 92mm. The graph showed a possible movement to settlement at A and possibly B, but not at any other of the points. The graph shows that the possible movement to settlement at A and B follow the plumbing repair on 20 May 2020.

82. In his first report, Dr Redman gives a detailed analysis of the movement of the edges of the slab over the time plotted in Figure 10.

83. Dr Redman and Mr van Heusden agree that the edge heave of the slab has distorted the slab to an irregular dish shape (see Figure 9 at CB p 1151).

82. As I have said, Dr Redman and Mr Mostyn agree that the slab movement has stabilised and that this is because the fill around the edge is likely close to saturated.

83. Dr Redman and Mr Mostyn agree that the steps set out in [33], [34] and [38], above are necessary for the remediation of the waffle slab. If they are not undertaken, the edges of the slab will subside in the event of an extended dry period and heave again when water is re-introduced, whether by rainfall or some other means. I accept that evidence.

84. The removal of the paving and the fill beneath it around the house and the replacement of the existing fill with impermeable fill, and the implementation of measures to control the water infiltration under the alfresco area would take three to six months. At the conclusion of the three to six month period a further period of twelve months would begin, during which it is expected that the ground would come into equilibrium with the changed moisture conditions; on average, over time, it is expected to become drier.

85. I accept the evidence of Dr Redman that the impact of the changed moisture conditions at the end of the fifteen to eighteen month process will be that the corners of the slab which have heaved the most (C and D on Figure 10) will subside 5 to 10 millimetres. The result will be a waffle slab which is still an irregular dish shape, but which has a differential between the centre and the north-eastern corner in the order of 70 millimetres rather than 92 millimetres.

86. There has been no assessment of whether the structural integrity of the waffle slab has been adversely affected by the edge heave which has occurred from October 2016 until about October 2022. The impact of the partial subsidence of the heaved edges on the structural integrity of the waffle slab has not been predicted, and neither has the impact of the proposed grout or resin injection process on the structural integrity of the waffle slab been predicted.

87. I find that the impact of the partial subsidence of the heaved edges of the waffle slab will have an impact on the interior of the house, but the extent and nature of that impact cannot be accurately predicted. The impact of the proposed grout or resin injection process will be destructive of the floors in the areas where injections are made. The raising of the slab also has the potential to cause further damage to the interior of the house, but the extent of that damage has not been predicted. The cost of the remediation of any damage to the house occasioned during the slab remediation process has not been estimated.

88. I find that the remediation of the fill around the house, under the pavement, will not bring the house into conformity with AS 2870, which requires the achievement of 30 millimetres of differential movement of the slab to preserve the integrity of the structure of the house on top of it. The resin or grout injection process is therefore suggested to raise the centre of the slab, which has not been raised before.

89. I have set out the uncertainties and risks associated with the resin or grout injection process above at [54] – [58]. They are significant.

90. The Builder argued various rectification methods, including that the waffle slab rectification process should be the basis for the award of damages, followed by the undertaking of internal repairs to the house. The Di Lullos argued that the demolition and rebuilding works should be the basis for the award of damages. These works are costed by Mr Burton at $1,102,000.00 (incl GST) plus an allowance for recent price rises caused by the Iran war, and by Mr Beck at $1,136,392.00 (incl GST) (figures from Mr Burton’s report of 7 April 2026). The estimates of the quantity surveyors differ by 3%, which is a very small difference given the complexity of the works costed.

91. If the remediation process is undertaken, it will be up to eighteen months before the resin or grout injections can be performed. The resin or grout injection process would require the removal of all fixtures in the central area of the house, which would have to be reinstated, and extensive damage to the flooring, which would need to be remediated. This would take at least several months. It would be nearly two years before the Di Lullos could move back into the house, even if each of the steps in the process went perfectly well, with no delay, and none of the risks materialised. The house would not be in the same condition as a new house. It would have undergone the many substantial repairs contemplated in the scopes of work costed by Mr Burton and Mr Beck, and possibly other repairs necessitated by the impact on the house of the subsidence of the edges and the raising of the centre of the waffle slab. At worst, the slab, at some stage during or after the process, may prove to have been compromised structurally, which could put the Di Lullos at risk of having to bring further proceedings. Concerns have been raised by several of the experts that some of the work required would not be undertaken with a guarantee or warranty. There is also doubt about whether any insurer would insure the work or the house. The house is unlikely to achieve compliance with AS 2870 with respect to the differential footing movement.

92. The remediation method favoured by the Builder as the basis for the award of damages would not put the Di Lullos into the position they would have been in, so far as money can do it, had the contract been performed. Had the contract been performed, the Di Lullos would have been handed a structurally sound house on a stable slab, with the expectation that the house would have a life of decades of soundness, in about mid-July 2017. All of the slab would have continued to rest on the natural soil for the life of the house in accordance with the Enrik design. The closest scenario to the performance of the contract, in time and in delivery of a structurally sound house on stable footings which will continue to comply with AS 2870, is the demolition and rebuilding scenario, which should, therefore, form the basis for the award of damages. This is the most reasonable course. It would be unreasonable to impose on the Di Lullos the many uncertainties and vulnerabilities to further damage and repair costs involved in the remediation proposed by the Builder.

93. I determine that the appropriate rectification method for the purpose of the calculation of damages is (in summary) the demolition of the house, the slab and the paving, the removal of the sand fill underlying the pavement and the undertaking of the works the subject of the contract signed on 31 August 2016 on the site. The estimates given by the quantity surveyors are so close that either figure could serve as the basis for the award, but given that Mr Burton has calculated the accommodation costs and the cost as at April 2026, I find that his estimate is the appropriate basis for the calculation of damages. The total award, comprising the cost of alternative accommodation for the Di Lullo family and demolition and building costs as at April 2026 would be $1,301,540.00. Having regard to the jurisdictional limit of the District Court, the award will be $1,250,000.00.

Contributory Negligence

94. Mr Size, the Builder’s barrister for the hearing on damages, complained that the issue of contributory negligence against the Di Lullos was not adequately dealt with in the decision on liability.

95. The Builder pleaded as follows in its defence:

22. …the defendant says that the plaintiffs:

(a) over watered the grass area surrounding the premises;

(b) caused landscaping to be carried out resulting in soil being pushed to the paving level of the premises;

(c) did not control plumbing leaks or drainage of moisture from air conditioners;

and thereby caused and contributed to the damage complained of and are guilty of contributory negligence.

96. During the hearing on liability, there were assertions from Mr Galvin, who was then the Builder’s barrister, based to some extent on the evidence of Mr van Heusden, that the watering of the lawn in front of the house by the Di Lullos and the failure of the Di Lullos to deal promptly with a leak in the air conditioner had contributed to the volume of water capable of migrating through the loose fill under the paving at the front of the house to the edge beam of the waffle slab. Those assertions, however, did not, at the trial, rise to the level to an argument that the Di Lullos were guilty of contributory negligence. There was also an allegation that Mr Di Lullo had pushed earth against the house when preparing the site for landscaping, but the evidence did not support that allegation. The evidence that I accepted was that it was the base material for the paving that provided the water present on the site from time to time access to the edge beam.

97. Each of the four independent expert witnesses who gave evidence at the hearing on liability, being Dr Redman (geotechnical engineer), Mr van Heusden (geotechnical and structural engineer), Mr Xeros (structural engineer) and Mr Tamaressis (structural engineer) agreed that the house was susceptible to movement, including heave, from the time the Builder handed the site back to the Di Lullos in June 2017.

98. Dr Redman, whose evidence I accepted in its entirety, said, at p 178 of the transcript, with reference to the house:

Well, it was susceptible to abnormal heave rather than just what might be expected under normal conditions, and it’s evidenced by the first observations of damage in early 2018, late-2017, which is before irrigation, before any damage to surfaces, and when it was average rainfall conditions. If you’ve got average rainfall conditions on a well-designed and constructed site, you should not see abnormal - once your conditions develop, then you should not see excessive heave or shrinkage taking place. But it already started in our first year before you anything else came on to the scene.

99. Dr Redman said, at p 133 of the transcript:

What I said in the joint report was answering the question, which was the house slab as constructed wasn’t suitable, and what I’m pointing to here is that the circumstance that existed in the as-constructed state for the veranda and the alfresco areas involved a sand fill between the nominal level shown on the cross-section that you took Mr van Heusden to, and the underside of the alfresco slab and the veranda slab was filled with sand fill and, in my view, that was inappropriate for the circumstances that existed, because it gave a preferred pathway for infiltration to occur from outside the verandah slab and the alfresco slab, such that moisture could infiltrate in the sand, which has a high permeability, in other words it has a high capacity to have water flow through it, and that water would find itself adjacent to the waffled slat edge beam, which is where you can get wetting up of the clay soils underlying the edge beam and causing heave. And that’s what I was referring to as being an inappropriate outcome for the as-constructed slab.

BARNETT: And when you say the water pathway can cause heave, do you mind just explaining to the Court what you mean by that?

WITNESS REDMAN: In normal circumstances on reactive clay sites, something like a verandah or an alfresco slab, or paving for that matter, has the effect of providing an edge distance between the main structural element that’s carrying the - the edge beam that’s carrying the main structure and the outside ground. And the outside ground is where the environmental changes of wetting and drying can impact on reactive clay so as to cause swell when it gets wet or shrinkage when it gets dry. By having that edge distance, say, for example, of the front verandah, it pushes that environmental change further away from the structural edge beam. It means that if there is variation in moisture, it’ll be the edge of the verandah that moves, not the edge of the building. However, to have that effect, you need to make sure that there isn’t a permeable pathway for water to get through under the slab. So therefore, if you are going to fill, so as to elevate the veranda slab, and I accept what Mr Van Heusden says that with waffle slabs, you will often fill against the waffle slab to elevate the ground, but in this circumstance, it needed to be a lower permeability material, not a sand, at least a clay sand so that it doesn’t act as a preferred pathway for water to get from outside to the edge of the slab.

100. In terms of the cause of the edge heave, which, in turn, caused the damage to the house, the expert evidence which I accepted in the judgment on liability was to the effect that, had there not been sandy fill or similar permeable material next to the edge beam, the water would not have travelled to the edge beam and caused it to lift. Dr Redman’s opinion, which I accepted, was that water in the ground from a variety of sources, particularly rainfall, would not have caused the damage to the house in the absence of the sandy fill or some other permeable pathway for water to travel laterally to the edge beam. Given the presence of the sandy fill, the edge heave was bound to happen to some extent because of rainfall.

101. I reject the submission that the Di Lullos are somehow culpable for that part of the paving performed by their contractor (and not the Builder). The Builder did not inform the Di Lullos or the contractor of the vulnerability of the edge beam to the waffle slab. The Builder did not warn the Di Lullos or the contractor of the need to keep sandy fill or other permeable material from the edge. Instead, the Builder left a finished ground level adjacent to the waffle slab which was too high and then placed loosely compacted sandy soil on top of it on the southern side of the house and at the alfresco area on the northern side of the house, next to the edge beam, and paved on top of that. This set the level and the method for the balance of the paving.

102. The fact that edge heave began in the first year after the house was built shows that the waffle slab would have heaved in response to any water source, including rainfall, and will continue to heave in response to any water source in the future if the house remains as it is.

103. I do not consider that the defendant has established that the Di Lullos are guilty of contributory negligence, either in relation to the breach of contract claim under the Home Building Act or in relation to the tortious claim under the Design and Building Practitioners Act. There has been no carelessness or breach of duty on their part. It was not established that any work done by Mr Di Lullo on the property caused the damage to the waffle slab or the house. The Di Lullos were not told and could not have known about the vulnerability of the waffle slab. Rainfall and lawn watering are events which can be expected to arise and it is reasonable to expect a newly constructed house to withstand them. It was Dr Redman’s evidence that the distortion of the waffle slab would have occurred to some extent, regardless of the leaking air conditioner and leaking pipes, on account of rainfall alone.

104. An argument that the Di Lullos were culpable for contributory negligence was pleaded by the Builder but not argued in the hearing on liability. Contributory negligence has not been established on the evidence.

Conclusion

105. The following orders will issue:

106. Judgment for the plaintiffs against the defendant.

107. The defendant is to pay to the plaintiffs damages in the sum of $1,250,000.00.

108. I will hear the parties on the question of costs.

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